- 12 -
A position in the notice of deficiency is substantially
justified if it is “justified to a degree that could satisfy a
reasonable person” and has a “reasonable basis in both law and
fact.” Pierce v. Underwood, 487 U.S. 552, 565 (1988)
(interpreting similar language in the Equal Access to Justice
Act, 28 U.S.C. sec. 2412 (1988)); Swanson v. Commissioner, 106
T.C. 76, 86 (1996). A reasonable basis exists if legal precedent
substantially supports the Commissioner’s position given the
facts available to the Commissioner. Coastal Petroleum Refiners,
Inc. v. Commissioner, 94 T.C. 685, 688 (1990). In deciding
whether the Commissioner acted reasonably, this Court must
“consider the basis for * * * [the Commissioner’s] legal position
and the manner in which the position was maintained.” Wasie v.
Commissioner, 86 T.C. 962, 969 (1986).
The fact that the Commissioner eventually loses or concedes
the case is not conclusive as to whether the taxpayer is entitled
to an award of administrative costs. Coastal Petroleum Refiners,
Inc. v. Commissioner, supra at 689; Wasie v. Commissioner, supra
at 968-969. It remains, however, a relevant factor to consider
in deciding the degree of the Commissioner’s justification.
Estate of Perry v. Commissioner, 931 F.2d 1044, 1046 (5th Cir.
1991) (award of litigation costs in the Court of Appeals), affg.
T.C. Memo. 1990-123; Swanson v. Commissioner, supra at 94.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011